What is the equipment after-tax salvage value

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Reference no: EM132033974

1. Karsted Air Services is now in the final year of a project. The equipment originally cost $32 million, of which 80% has been depreciated. Karsted can sell the used equipment today for $8 million, and its tax rate is 40%. What is the equipment's after-tax salvage value? Round your answer to the nearest dollar. Write out your answer completely. For example, 13 million should be entered as 13,000,000.

2. Liberty Services is now at the end of the final year of a project. The equipment originally cost $20,000, of which 75% has been depreciated. The firm can sell the used equipment today for $6,000, and its tax rate is 40%. What is the equipment's after-tax salvage value for use in a capital budgeting analysis? Note that if the equipment's final market value is less than its book value, the firm will receive a tax credit as a result of the sale.

a. 5,992

b. 6,328

c. 5,040

d. 5,712

e. 5,600

Reference no: EM132033974

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